Seaport downgrades PayPal and Bill.com ahead of Q1 earnings on macro concerns

Investing.com -- Seaport Research downgraded PayPal (NASDAQ:PYPL) Holdings and Bill.com warning that new macroeconomic pressures, particularly tariffs, could weigh on the fintech sector starting in the second half of 2025.

The brokerage cut PayPal to Sell from Neutral and Bill.com to Neutral from Buy, citing growing doubts about both companies’ ability to meet previously issued long-term growth targets.

We’ve lost confidence that either will eventually meet their previously stated guidance in this new paradigm, Seaport said.

While first-quarter results are expected to be largely stable, Seaport trimmed its earnings estimates across the sector, pointing to slowing consumer and business spending.

The firm now forecasts a median EPS cut of 0.4% for 2025 and 2.2% for 2026 across its coverage.

For PayPal, Seaport questioned whether the company can deliver 8%-10% growth in Checkout total payment volume by 2027, especially if discretionary spend and cross-border volumes weaken.

In the case of Bill.com, Seaport sees downside risk to the company’s forecast of 20% core revenue growth in FY26. The firm now expects 16% growth and flagged weakening sentiment among small- and mid-sized businesses.

Even as valuations have pulled back, Seaport urged investors to remain selective.

Analysts believe first quarter results could bring a short-term relief rally.

“Q1 results should be fine, and there could even potentially be a NT snapback given shares have sold off noticeably over the few weeks on a better than feared quarter,” analyst said.

Analysts also believe there eventually will be an earnings revision cycle in the sector, with consensus estimates coming down, over these next few months, and “therefore we'd be pragmatic/selective buyers on names we remain Buy-rated on – we acknowledge a high likelihood that there's significant volatility in the space NT.

The brokerage is buy rated on Visa (NYSE:V), Fiserv (NYSE:FI), Shopify (NASDAQ:SHOP), Block, Shift4Pay and Dave.